Local governments argued over who will profit the most from US Open, records show

Claims and counterclaims about which local governments stand to profit most from the U.S. Open golf championship caused a rift to develop last fall between Pierce County and the city of University Place, according to documents recently obtained by The News Tribune.

The trouble began when University Place city attorney Steve Victor tried to figure out how much revenue the county stood to gain by holding the event at Chambers Bay, a county-owned golf course located inside the city limits of UP. Victor then wrote a memorandum saying it looked like the county would reap considerably more money than his city.

County leaders saw it as an underhanded ploy to discredit the county as it sought other jurisdictions’ help in providing security for the June 15-21 tournament.

Deputy county executive Kevin Phelps was particularly upset that Victor shared his memo with Lakewood.

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“To actively work against our efforts to partner with other public safety agencies to provide a safe U.S. Open is indefensible,” Phelps wrote in a letter to University Place officials.

The friction spawned a series of letters and meetings between the two governments, described this month by Victor as “an exchange of paper grenades,” before a compromise was reached.

Today, officials from both governments say the disagreement is behind them and that everyone is pulling together to ensure that the first U.S. Open held in the Pacific Northwest is successful.

“We’ve had a good working relationship with University Place,” Phelps said in an interview last week.

It didn’t look that way back in September, when Victor wrote his memo to his City Council and city manager in which he explained his understanding of how much money the county would bring in by allowing the United States Golf Association to hold its annual championship at Chambers Bay.

Victor said last week that he wrote the memo at a time when county officials were approaching local governments, including his, to ask for help in providing security and other services for the U.S. Open, which is expected to draw 235,000 spectators to Chambers Bay.

Some University Place officials had questions about how much financial help the county needed and why, he said.

“The message we were getting from the county was, ‘We’re not sure how much, but a bunch,’ ” Victor said last week. “Some of my elected officials were asking me, ‘What really are their obligations?’ ”

Victor said he researched as much as he could about the county’s agreement with the USGA and about the golf association’s contracts with other communities slated to hold future U.S. Opens, including San Diego in 2021.

The bottom line, Victor wrote in his Sept. 18 memo, is the county stood to bring in as much as $4 million in revenue. That included $2.5 million from the USGA to rent the golf course and another $1.5 million or so from a percentage of high-end ticket packages.

University Place would get some money from the USGA for providing the U.S. Open with a “master event permit,” but it would collect nowhere close to $4 million.

“While the numbers speak for themselves in terms of the benefits to the county, it is also important to note that no event of this scope and scale has ever occurred in this area,” Victor wrote.

“Unlike the situation in San Diego, where the city is both the course owner and the permitting authority, in the case of the U.S. Open, (University Place) is not a party to any of the revenue or benefits of the lease, but UP remains the responsible government for permitting, and UP residents will experience the greatest impacts of the event.”

Victor later shared a copy of the memo with officials in Lakewood. He said officials in that city were asking similar questions about the county’s financial standing as the U.S. Open approached.

Someone from Lakewood shared the memo with Phelps, who is overseeing much of the county’s preparation for the event.

He was not happy, as he made clear in a three-page letter to University Place City Manager Steve Sugg and copied to County Executive Pat McCarthy, USGA officials, UP Mayor Denise McCluskey and members of the City Council.

Phelps wrote that Victor’s memo was “terribly flawed and missing information.”

While the county stands to bring in about $4 million in revenue from the event, it also has significant expenses associated with it, Phelps wrote.

Those include more than $2.5 million in improvements to Chambers Bay, he said. Among them was expanding the driving range and making improvements to a number of holes, as required by the USGA.

What’s more, the Sheriff’s Department anticipates assigning up to 100 deputies to provide security at the U.S. Open, Phelps wrote. The county also has contracted with other law enforcement agencies, including the State Patrol and Thurston County Sheriff’s Office, to provide personnel.

The county has agreed to reimburse those agencies up to $72 per hour for “overtime worked at the U.S. Open and overtime incurred to backfill personnel assigned to the U.S. Open,” according to a memorandum of understanding between Pierce and Thurston counties.

“While we do not have an exact cost for these services calculated as of today, it obviously represents a significant additional investment by Pierce County,” Phelps said in the Oct. 14 letter. “In addition to the previously identified responsibilities and resources that Pierce County has undertaken in its agreement with the USGA, the county has committed significant resources within the Department of Emergency Management, Information Technology and our GIS division to assist in planning and execution of the event.”

Phelps said last week that he would not release how much the security plan would cost the county until after the championship.

“We’ll provide a real good accounting then,” he told a reporter.

The county also would take a financial hit from closing Chambers Bay to the public in the run-up to the championship, Phelps wrote in his letter. He estimated that loss at about $1.3 million but said last week that the number might be lower. The mild winter allowed more golfers to play the course than expected before it was closed last week, Phelps said.

Phelps and County Executive McCarthy told the County Council earlier this month that the county hopes to break even on the event.

In his letter last fall, Phelps said University Place was the government likely to profit the most.

“The irony of Mr. Victor’s memo is almost immeasurable,” Phelps wrote. “While he incorrectly paints a picture of a financial windfall for Pierce County, he fails to acknowledge that the city of University Place will actually be the one reaping the significant financial benefit, estimated to be in excess of $850,000 just from the week of the championship.”

Phelps also criticized University Place for attaching a 5 percent admissions tax on every U.S. Open ticket, something he said no other jurisdiction has done in the 115-year history of the event.

As of Thursday, University Place had received $821,079 in admission tax revenue. The city is projecting it also will collect about $400,000 in sales tax revenue during the tournament, said Eric Faison, the city’s finance director.

University Place has budgeted about $225,000 of that for U.S. Open-related expenses, including $50,000 to the Pierce County Sheriff’s Department for security costs. The rest has gone into the general fund to pay for normal city operations, Victor said.

“It isn’t a windfall,” the city attorney said.

Meanwhile, Lakewood has agreed to provide parking for the U.S. Open at Fort Steilacoom Park and to help with traffic control and other security measures.

Phelps requested in his letter that University Place provide the county with a list of jurisdictions to whom Victor sent his memo so that “we will be able to reach out and provide an accurate, complete picture of the county’s financial commitment.”

Phelps said last week that University Place never provided that list.

Victor told The News Tribune that his memo was “not designed for any nefarious purpose.”

“The purpose of the memo was to answer the questions that the county didn’t answer,” he said. “We never did receive an explanation of what their losses were.”

Once tempers cooled, the University Place City Council agreed to give the county $50,000 to help with security costs, Victor said.

University Place also deeply discounted permits the USGA needed to hold its championship in the city. That cost could have been upwards of $400,000, but the city agreed to cap the price at $25,000 in the hopes of attracting the U.S. Open back to Chambers Bay in the future, Victor said.

“In the end, I’d say this amounted to a tempest in a teacup, but, really, a teacup is still too big,” he said. “Maybe a thimble?”

Phelps told The News Tribune the dust-up was just part of the process of putting together an unprecedented event.

“There was no doubt some frustration,” he said. “We were just working through some rough spots in the relationship.”